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NSE Intra-day chart (05 May 2022)
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Market Commentary 06 May 2022
Benchmarks likely to get gap-down opening amid global sell-off


Indian equity benchmarks failed to hold up their early gains as rally fizzled out in last leg of trade after traders opted to book profits amid worries of high inflation and prospects of more rate cuts that will slow growth going ahead. Markets made an optimistic start as sentiments remained upbeat in reaction to the US Fed meeting outcome, which came in line with the market expectations. Sentiments got a boost with the commerce ministry's statement that India's services exports set a new record of $254.4 billion (about Rs 19 lakh crore) in 2021-2022. It said the exports also hit an all-time monthly high of $26.9 billion in March. Adding more optimism, Reserve Bank Governor Shaktikanta Das said recent trade agreements and geopolitical conditions open up potential market opportunities for India. Traders took note of Chief Economic Adviser V Anantha Nageswaran's statement that India's growth is expected to be in the range of 7-8.5 per cent given the global uncertainties. Also, firm opening in Indian rupee aided the market sentiments. Markets traded in fine fettle for most part of the day as activity in India's dominant services sector grew at its fastest pace in five months in April on strong demand, prompting firms to add jobs for the first time since November, a private survey showed, but sky-rocketing inflation remained a major concern. The S&P Global India Services Purchasing Managers' Index rose to 57.9 in April from 53.6 in March. Adding more comfort among traders, SBI chairman Dinesh Khara said that the surprise rate hike by RBI accompanied with tightening of the cash reserve ratio illustrates the flexibility with which the central bank operates, and the move will support the markets. However, sell off in last leg of trade played spoil sports for the markets and dragged them near neutral lines as traders are now focusing towards earnings and upcoming macroeconomic data. Another factor is investors are pulling out funds from secondary markets and infusing in the ongoing LIC IPO. Finally, the BSE Sensex rose 33.20 points or 0.06% to 55,702.23 and the CNX Nifty was up by 5.05 points or 0.03% to 16,682.65.


The US markets ended deeply in red on Thursday as traders cashed in on the relief rally seen following the Federal Reserve's monetary policy announcement on Wednesday. The Federal Reserve raised interest rates by 50 basis points as widely expected, although Fed Chair Jerome Powell was less hawkish than some had feared. Further, concerns about higher rates, inflation, the economic outlook and the ongoing war in Ukraine remain, contributing to the sharp pullback on Wall Street. Besides, a sharp increase in treasury yields also weighed on the markets, the yield on the benchmark ten-year note soaring to its highest levels in well over three years. On the sectoral front, steel stocks turned in some of the market's worst performances amid concerns about the outlook for global demand, dragging the NYSE Arca Steel Index down by 6 percent to a two-month closing low. Substantial weakness was also visible among retail stocks, as reflected by the 5.5 percent nosedive by the Dow Jones U.S. Retail Index. The index plunged to its lowest closing level in well over a year. On the economic data front, labor productivity in the U.S. showed a substantial pullback in the first quarter of 2022, according to a report released by the Labor Department. The Labor Department said labor productivity plunged by 7.5 percent in the first quarter, reflecting the largest decline since the third quarter of 1947. The steep drop in the first quarter came after labor productivity surged by a revised 6.3 percent in the fourth quarter of 2021. Street had expected productivity to tumble by 5.4 percent in the first quarter compared to the 6.6 percent spike that had been reported for the previous quarter. Meanwhile, the Labor Department released a report on Thursday showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended April 30th. The report showed initial jobless claims rose to 200,000, an increase of 19,000 from the previous week's revised level of 181,000. Street had expected jobless claims to inch up to 182,000 from the 180,000 originally reported for the previous week.


Crude oil futures ended higher on Thursday continuing to benefit from the recent proposal by the European Union to impose sanctions on Russian oil. Meanwhile, the US dollar rebounded to its highest since December 2002, a day after the Federal Reserve affirmed it would take aggressive steps to combat inflation. A strong dollar makes oil more expensive for holders of other currencies. However, upside remained capped as the Organization of the Petroleum Exporting Countries, Russia and allied producers (OPEC+) agreed to another modest monthly oil output increase. Benchmark crude oil futures for June delivery added $0.45 or 0.4% percent to settle at $108.26 a barrel on the New York Mercantile Exchange. Brent crude for July delivery gained $0.68 or 0.6 percent to settle at $110.82 (Provisional) a barrel on London's Intercontinental Exchange.


Rising for the second consecutive day, Indian rupee ended higher against dollar as the US Fed Chairman Powell pushed back against a steeper 75 basis points rate hike in the coming months. Traders also took support as activity in India's dominant services sector grew at its fastest pace in five months in April on strong demand, prompting firms to add jobs for the first time since November, a private survey showed, but sky-rocketing inflation remained a major concern. The S&P Global India Services Purchasing Managers' Index rose to 57.9 in April from 53.6 in March. On the global front, euro pulled back from a one-week high against the U.S. dollar on Thursday after German industrial orders fell more than expected in March, signaling Europe was facing growing headwinds from the war in Ukraine. Finally, the rupee ended at 76.33 (Provisional), stronger by 7 paise from its previous close of 76.40 on Wednesday.


The FIIs as per Thursday's data were net sellers in both equity and debt segment. In equity segment, the gross buying was of Rs 17192.16 crore against gross selling of Rs 20059.41 crore, while in the debt segment, the gross purchase was of Rs 449.74 crore with gross sales of Rs 506.84 crore. Besides, in the hybrid segment, the gross buying was of Rs 30.10 crore against gross selling of Rs 24.69 crore.


The US markets ended sharply lower on Thursday amid weak earnings and fed rate hikes fear. Asian markets are trading mostly in red on Friday after a 425-basis point lift in Bank of England's inflation forecast for 2022 as it raised key rates to their highest since 2009 rattles Wall Street. Indian markets managed to halt a three-day losing streak on Thursday but lost steam in the final hours of a session that began on a strong note amid positive global cues. Today, domestic indices are likely to get gap-down opening amid sell-off in the global markets. Traders will be concerned as India Ratings said inflation, supply chain disruptions and a weak consumption demand could upset the revival in credit growth in the medium term. It said the reversal of the interest rate cycle--marked by the Reserve Bank of India's 40 basis points increase in policy repo rate--would weigh down credit growth as borrowings become costlier. There will be some cautiousness as consequent to the 40 basis point hike in the repo rate announced by the Reserve Bank of India (RBI) on Wednesday, large banks such as ICICI Bank and Bank of Baroda have raised their lending rates by an equal amount on loans linked to the external benchmark. However, some respite may come later in the day as commerce and industry minister Piyush Goyal said all the key indicators such as jump in exports and high GST collection in April reflect that the country's economy is on the growth path. He said that goods and services exports have touched $675 billion in 2021-22, while the GST (Goods and Services Tax) collection in April touched the highest ever level of about Rs 1.68 lakh crore, up 20 per cent from the year-ago period. There will be some buzz in telecom industry stocks as latest data published by the telecom regulator Trai showed that telecom service providers' gross revenue declined by 2.64 per cent to Rs 69,695 crore in December 2021 quarter. Sugar industry stocks will be in focus as industry body Indian Sugar Mills Association (ISMA) said India has exported 7 million tonnes of the sweetener so far in the ongoing 2021-22 marketing year, and exports from the country may touch a new record of 9 million tonnes. There will be some reaction tea industry stocks as latest Tea Board data showed that tea exports declined by 2.4 per cent to 184.35 million kg during the April-February period of the last fiscal. The shipment of the crop was at 188.91 mkg in the corresponding period of the previous year. Infrastructure industry stocks will be in limelight as Minister Nitin Gadkari said the road transport and highways ministry aims to construct a record 18,000 km of highways in 2022-23 at a pace of 50 km per day. There will be some important earnings announcements too to keep the markets buzzing.


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  • Wipro and VMware Inc. have expanded collaboration that will enable customers to achieve the cloud freedom they desire with the enterprise control they require as they execute their digital strategies. 
  • Tata Steel is planning to install Electric Arc Furnaces (EAF) in north, south and west India that will use scrap as an environmentally friendly step. 
  • SBI is mulling to raise long term fund in single/multiple tranches under Reg-S/144A, up to $2 billion through a public offer and/or private placement of senior unsecured notes in US dollar or any other convertible currency during FY23. 
  • L&T's construction arm -- L&T construction has been awarded yet another contract in the Bullet Train Project.
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